Private Equity Interview Prep Methods

For those in banking currently participating in PE recruiting or those that have already traveled down this road... what is/was your preparation methodology or private equity guides? Obviously you need to address fit, technicals and deal experience. Im mainly talking about deal experience here, how did you guys prepare? I personally don't remember anything from any of my past deals. Those that have already been through the process, what are the key things you need to have a firm grasp of while going about the process parsimoniously? ---Message from WSO below---

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Comments (30)

Mar 5, 2011 - 7:55pm

Honestly, I think the most important thing about discussing deal history is being able to discuss investment strategy, why it was a good investment, and risks. I haven't had a single interview that asked me financial questions about the client or transaction. That may not be the case for megafunds, but I've interviewed with a few top middle market funds and it is primarily about fit, deal experience (again, understanding the merits of the transaction), and industry-specific knowledge (making sure you have an opinion that you can back up). I think the best way to prep is scan the CIM/management deck quickly, specifically the investment highlight/risk sections. If you can't speak intelligently about the deal from there.... you probably shouldn't speak about it.

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Mar 5, 2011 - 7:56pm

And I think it's important to prep answers for "Why PE?" or "Why this firm?" but I honestly don't buy a whole ton of prep for buyside interviews. Unless you're shooting for KKR or TPG, a lot is going to be about fit, and fit isn't something you prep for.

Mar 8, 2011 - 8:49am

For reviewing my deal experience, I literally wrote out all the major details on each deal a couple of times and reviewed them from time to time. When I say all the major details, I mean the major financial stats, investment considerations, trouble areas of the company and how to mitigate them, buyer concerns, and how the process went and ended up overall. Really just a matter of writing things out and being able to speak to each deal intelligently. Took a shit ton of time but helped me in interviews immensely. Was especially helpful because it stopped me from sounding like an "umm, like" stuttering idiot, hahaha.

Mar 8, 2011 - 11:59am
TheKing:
For reviewing my deal experience, I literally wrote out all the major details on each deal a couple of times and reviewed them from time to time. When I say all the major details, I mean the major financial stats, investment considerations, trouble areas of the company and how to mitigate them, buyer concerns, and how the process went and ended up overall. Really just a matter of writing things out and being able to speak to each deal intelligently. Took a shit ton of time but helped me in interviews immensely. Was especially helpful because it stopped me from sounding like an "umm, like" stuttering idiot, hahaha.

Thats what I did. Problem is, each deal consisted of like 10 pages of notes... which translates to an entire notepad filled with notes. It generally took me 5-7 hours to write out high-level and detail info on each deal the first time around. Across 5-10 deals, that gets pretty substantial.

Array
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Mar 8, 2011 - 9:11am

I have an interview with a PE firm and have no Banking/Consulting experience. Its a firm that hires undergrads. I have no idea what to expect.

Mar 8, 2011 - 2:02pm

That's pretty hardcore, must be some complicated as shit deals. What you could probably do is just pick out like 3 of the most relevant deals and focus in on those, while having a high level understanding of the others. Generally when i went through interviews, I'd get to pick and choose which deals I would talk about and could usually tailor the discussion based upon the deal I chose. Plus if you know the fund you are talking to has a specialty in a certain industry, you can focus on the appropriate deal.

With that said, I don't know how different it gets in the $1B+ fund range. The biggest fund I ever interviewed with was about $1 billion in size and most of the ones I met with were around $300 - $700M in size.

Mar 8, 2011 - 5:39pm

This was my structure for talking about an M&A buyside deal that I had at the top of my resume:

  • 1 sentence on what our client the buyer did, how much revenue and EBITDA they generated (so they can get an idea of size) and firm value (so they can assess the transformational size of the acquisition) - you should know all these numbers
  • A few sentences on what the target did - revenue and EBITDA, including overview of growth drivers in the target industry (PE firms love thinking about industries in terms of growth drivers, so show them you understand)
  • Transaction rationale - our buyer liked the market position (give market share numbers), wanted to leverage target technology (throw some industry terms out there if you know what you're talking about) and complementary geographic end markets/synergies
  • What the client needed our (the advisor's) help on (1 guy specifically asked me "So why did these guys need you? Surely a $4bn company would have this target on it's radar...) - have a reason and show that you understand the value of what you worked on. In my case, they really needed our help developing projections for all of the company high-tech end markets
  • What my role was - built and ran a flexible operating model, segment by segment, compiled industry forecasts for different end markets, liased with senior people for feedback on projections. Emphasize that YOU did the modeling (this will be your number 1 contribution to a PE firm as a Pre-MBA analyst/associate - they want to be confident in your technicals and want to know that you've done some complex modeling for a live transaction).
  • Throw in any client interaction - in my case, I spent 2 days with just my MD at the client site meeting with CEO and CFO. I talked about how that was one of my favorite parts of my experience.
  • Finally, throw in a few sentences about how the deal turned out. Did it go through? Did you lose the bid? Did it get rejected by the company's Board? And offer your opinion about why this happened.

This was all around a 5 minute answer that I gave in response to a question about this specific deal. I found that when I laid out this answer showing a good mix of both numbers and qualitative understanding, I got very few "trick" follow-up questions. They were confident that I knew what I was talking about.

To prep for this, I actually found it helpful to skim through the CIM that we had for the target as well as the Board presentation that we had put together (you're the analyst - you pulled all-nighters for these materials way back when right? Use them!)

Mar 8, 2011 - 7:18pm
HireUp212:
This was my structure for talking about an M&A buyside deal that I had at the top of my resume:
  • 1 sentence on what our client the buyer did, how much revenue and EBITDA they generated (so they can get an idea of size) and firm value (so they can assess the transformational size of the acquisition) - you should know all these numbers
  • A few sentences on what the target did - revenue and EBITDA, including overview of growth drivers in the target industry (PE firms love thinking about industries in terms of growth drivers, so show them you understand)
  • Transaction rationale - our buyer liked the market position (give market share numbers), wanted to leverage target technology (throw some industry terms out there if you know what you're talking about) and complementary geographic end markets/synergies
  • What the client needed our (the advisor's) help on (1 guy specifically asked me "So why did these guys need you? Surely a $4bn company would have this target on it's radar...) - have a reason and show that you understand the value of what you worked on. In my case, they really needed our help developing projections for all of the company high-tech end markets
  • What my role was - built and ran a flexible operating model, segment by segment, compiled industry forecasts for different end markets, liased with senior people for feedback on projections. Emphasize that YOU did the modeling (this will be your number 1 contribution to a PE firm as a Pre-MBA analyst/associate - they want to be confident in your technicals and want to know that you've done some complex modeling for a live transaction).
  • Throw in any client interaction - in my case, I spent 2 days with just my MD at the client site meeting with CEO and CFO. I talked about how that was one of my favorite parts of my experience.
  • Finally, throw in a few sentences about how the deal turned out. Did it go through? Did you lose the bid? Did it get rejected by the company's Board? And offer your opinion about why this happened.

This was all around a 5 minute answer that I gave in response to a question about this specific deal. I found that when I laid out this answer showing a good mix of both numbers and qualitative understanding, I got very few "trick" follow-up questions. They were confident that I knew what I was talking about.

To prep for this, I actually found it helpful to skim through the CIM that we had for the target as well as the Board presentation that we had put together (you're the analyst - you pulled all-nighters for these materials way back when right? Use them!)


I dont have anything to benchmark your answer against, but that was a great breakdown. Thanks. BTW -- how did the interviews go?
Mar 8, 2011 - 8:15pm

And could you expand on "very few trick follow ups"? It seems like you're comparing this to something else... what have been some of the types of trick follow up questions you've seen in the past?

Array
Mar 9, 2011 - 1:55pm
Marcus_Halberstram:
And could you expand on "very few trick follow ups"? It seems like you're comparing this to something else... what have been some of the types of trick follow up questions you've seen in the past?

In my opinion, they're looking to see that you can speak to both the numbers and the qualitative aspects of the deal...and can grill you on one or the other if they sense you might be trying to steer the deal convo one way because you're not comfortable. For example, in some of my earlier interviews (before I brushed up on all of this), if I talked about a deal just qualitatively and didn't throw out numbers, then they would definitely ask about sales, EBITDA, possibly market cap and firm value for your client. One guy asked me to walk through all of the sources and uses (tranches, leverage, pricing, etc).

Conversely, I once ended up talking about this complicated joint venture structure that we analyzed - and I focused too much on the numbers and ended up getting grilled on the rationale for 10 minutes - pros and cons of this structure vs. an IPO vs. outright sale, etc. For the deal I mentioned above, for example, I say "our client wanted to leverage the target's technology" for one of the transactional rationales, but I studied up to make sure I was comfortable taking it one step further if they actually asked what the technology was (wikipedia very helpful here). Even if the interviewer has no idea about this space, he can still discern whether you know what you're talking about (or bullshitting very confidently) vs. just making shit up on the spot.

In my case, for this particular deal, I got very few follow-up questions period. Done deal. They wanted to know about the deal - I gave them 5-7 solid minutes on the numbers and the rationale. Preempted any questions in a way. Move on.

Mar 8, 2011 - 10:36pm

marcus - aren't you an associate in banking now? how receptive are PE funds to your candidacy and what kind of funds are you targeting?

regarding interview prep - different things work for different people - when i went through the PE process from an industry coverage background, focus was on thoughts regarding the industry, where players were segregated, along with everything stated earlier

when i went through it as a restructuring banker - i focused more on how the deals were structured (all of my deals were busted LBOs), how they fell apart and what the new structure looked like

i think the key for you is to really have 2-3 deals on ur resume to talk about. more deals lead to more headaches during interview prep and during the interviews themselves.

if you've had multiple jobs, just keep it to one deal per past job unless you worked on TXU, HCA and Kinder Morgan during ur time at GS/MS/JPM/Citi

------------ I'm making it up as I go along.
Mar 9, 2011 - 1:56pm

Boutique private equity interview (Originally Posted: 08/04/2010)

I've got an interview coming up with a regional boutique firm (dozen bankers) that does private equity, M&A, and advisory. It's early in the game but it would be for full time employment starting next summer.

Obviously they aren't competing with KKR, TPG, Blackstone, etc. for deals, but they are one of the strongest in their market. Furthermore, they have pretty strong backgrounds - lots of HBS, Wharton, and Darden (they're located in the south).

Should I expect the typical private equity questions or something a little different? Althoug their deals aren't high profile and might be perceived as "unsophisticated," I don't see why their fundamental tools would be any different.

TIA.

Mar 9, 2011 - 1:57pm

Shouldn't your username just be "Yuppie"? I feel like the term never stopped being used, in which case it would reference more than just the 80s.

Sorry if you thought this post would be advice, I'll read your actual post after I send this.

"If you can count your money, you don't have a billion dollars." - J. Paul Getty
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Mar 9, 2011 - 1:58pm
San Franciscan:
Shouldn't your username just be "Yuppie"? I feel like the term never stopped being used, in which case it would reference more than just the 80s.

Sorry if you thought this post would be advice, I'll read your actual post after I send this.

Haha, yeah I get where you're coming from. I'm probably no more "yuppie" than most people on here, but some of my less ambitious friends use it from time to time to describe me and other peers who are chasing after filthy lucre. The name actually came from the Curren$y song "Modern Day Hippie" (an underground rapper), and I use it a lot of places.

One of the mainstream men's mags (GQ or Details) did a story a few years back about how "we're all yuppies now."

Mar 9, 2011 - 2:01pm
Modern Day Yuppie:
San Franciscan:
Shouldn't your username just be "Yuppie"? I feel like the term never stopped being used, in which case it would reference more than just the 80s.

Sorry if you thought this post would be advice, I'll read your actual post after I send this.

Haha, yeah I get where you're coming from. I'm probably no more "yuppie" than most people on here, but some of my less ambitious friends use it from time to time to describe me and other peers who are chasing after filthy lucre. The name actually came from the Curren$y song "Modern Day Hippie" (an underground rapper), and I use it a lot of places.

One of the mainstream men's mags (GQ or Details) did a story a few years back about how "we're all yuppies now."

"we're all yuppies now" indeed!

Funny story, I went to an upper-middle class high school (I'm saying this to note that many of us are now yuppies) and back then we naively referred to anyone that regularly wore a peacoat and scarf (clothing that is never necessary in the Bay Area) as a yuppie.

"If you can count your money, you don't have a billion dollars." - J. Paul Getty
Mar 9, 2011 - 1:59pm

Congrats. I would say just prepare for the worse interview ever. Not to say it will be, but you should go into it thinking that you will be drilled and asked tough questions and prepare for that so you will be able to handle whatever they throw at you.

Stereotypically smaller/boutique/regional firms aren't as harsh in the interview process and they tend to focus more on fit, but as you said, the fundamental tools should be the same, thus, so should your the level of preparation be for the interview. Who knows, maybe they intend to lean on you rather heavy when you first step through the door so they might put you through the ringer during the interview to see what your capacity is. The bad thing (or good thing depending on your point of view) about smaller shops is they can't have any dead weight, where as larger places have other analyst to pick up any slack. Good luck. Let me know if this is in ATL and we can grab a drink. Good luck.

Regards

"The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so." - Ronald Reagan
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Mar 9, 2011 - 2:00pm
cphbravo96:
Congrats. I would say just prepare for the worse interview ever. Not to say it will be, but you should go into it thinking that you will be drilled and asked tough questions and prepare for that so you will be able to handle whatever they throw at you.

Stereotypically smaller/boutique/regional firms aren't as harsh in the interview process and they tend to focus more on fit, but as you said, the fundamental tools should be the same, thus, so should your the level of preparation be for the interview. Who knows, maybe they intend to lean on you rather heavy when you first step through the door so they might put you through the ringer during the interview to see what your capacity is. The bad thing (or good thing depending on your point of view) about smaller shops is they can't have any dead weight, where as larger places have other analyst to pick up any slack. Good luck. Let me know if this is in ATL and we can grab a drink. Good luck.

Regards

Thanks.

The interview is in Atlanta; I sent you a message.

Best Response
Mar 9, 2011 - 2:02pm

private equity interview Prep Question (Originally Posted: 12/18/2015)

I'm a senior at a Target School for IB currently trying to break into the buy-side straight out of undergrad. I have a superday coming up with a middle market PE Firm for an entry level investment/ pe analyst position. I know that for most entry level PE interviews there is a case study; however, most of these interviews are for post-IB associate roles. Moreover, the firm has said nothing that would indicate I should expect a case study (i.e. email says I'll be speaking with a bunch of the senior partners in order to determine my fit at the firm as well as qualifications).

All that being said/TLDR version: Should I be prepared for a case study?

Mar 9, 2011 - 2:03pm

Case studies are common, especially if it's at a more consultant heavy firm like Audax. They're tough to prepare for, so just look at some examples, and be prepared to use everything you know about finance and business to help you reason your way through it.

Mar 9, 2011 - 2:05pm

private equity interview help! (Originally Posted: 06/04/2015)

Hey so I have an interview coming up in a couple weeks at a new Private Equity fund in CT for a spot as their junior analyst. I won't lie, went to a pretty mediocre school (Class of 2015), even though I have two good internships under my belt, and got the interview through a friend. The fund is small ($120mill) and I would be interviewing in front of their partners (5), all of which have very impressive credentials. I was just wondering if anyone has any advice, anything that could be helpful really. I graduated as an Economics major so I never really got the "real finance" classes so I feel like I'm at a disadvantage with regards to the other kids.
Thanks!

Mar 9, 2011 - 2:07pm

I would focus on 'getting' the concepts and basics of LBO's and the relationship with GPs and LPs. Personally, I think you should know the financial statements cold, whether now or soon after. It's not that hard, repetition does it. Be cool, they don't expect any college kid to know all the tricks of the trade, but understand the industry concepts, be rock solid with Excel, be smart, industrious and likeable.

Good luck from a fellow Econ major

Global buyer of highly distressed industrial companies. Pays Finder Fees Criteria = $50 - $500M revenues. Highly distressed industrial. Limited Reps and Warranties. Can close in 1-2 weeks.
Mar 9, 2011 - 2:08pm

Help! private equity interview in three days! Interview adivce? (Originally Posted: 05/12/2012)

I am an undergrad and after some cold calling and networking have been invited for an interview with a middle market P.E. firm for a summer position. I finally got back home and some time to let of steam after finals and basically hell week(s). I am trying to prepare but this I feel like this will be substantially different from my earlier equity research and investment management interviews.

I have been trying to prepare but am still not sure if I fully understand how to do an LBO properly, I think I got a DCF down. Also, I had a college class which had me do myriads of case analysis but not sure if I could handle something like that or prepare in the short term.

Mar 9, 2011 - 2:09pm

First try to understand how an LBO is structured at a high level:
http://www.ibankingfaq.com/interviewing-technical-questions/leveraged-b…

Given the time you have, your best friend is this website as far as the modeling is concerned. Try going through the LBO tutorial:
http://macabacus.com/lbo-model/introduction

Take a step back however - I would highly recommend getting the qualitative info down first - why private equity? what makes you a good fit for the firm? Are there any particular sectors you're looking at which overlap with the firm's investment mandate?

If you have these down, they'll be less concerned with you knowing how to build a full-blown lbo model (takes more than a day to get it down) and will care more about why you vs 20 million other candidates. You sound like a undergraduate so they're not going to penalize you for not knowing the exact mechanics of an LBO. All the best

Mar 9, 2011 - 2:10pm

1st round - private equity interview (Originally Posted: 11/11/2007)

I am a junior looking for a summer internship - have a 1st round coming up with a PE shop in Chicago - what can I expect in the interview? - technical, behavioral, both, etc...

Also, does anyone have any info on CC Industries in Chicago? - I know the basics (Hoovers) but would like to get my hands on some more information.

Thanks

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